When discussing the purchase of an apartment or a house, we often think of housing loans and subsidies. However, according to new data from the Croatian National Bank, as many as seven out of ten properties in Croatia are purchased with cash. This means that loans participate in only a smaller part of the market, on average around 30% of all transactions.
This trend puts Croatia in a specific position compared to most European countries, where loans are the main way to finance the purchase of apartments. You can find out more about real estate prices in Europe here.
Loans Play a Smaller Role Than You Think
In the period from 2021 to 2024, the share of credit-financed purchases was stable at around 30%. This percentage increased only during government programs subsidizing housing loans, when in some months it reached 40%. But as soon as the programs ended, the share of loans returned to lower levels.
Most credit-financed transactions (81%) relate to housing loans, while about 10% are financed exclusively by other types of loans (e.g., non-purpose), and 9% by a combination of housing and non-housing loans. Interestingly, non-purpose loans are often used for the adaptation of real estate, and not so much for the purchase itself.
Who Buys the Most Without Loans?
The largest part of cash purchases relates to domestic natural persons, who account for an average of 55% of all transactions. A smaller share goes to legal entities (about 4%), while foreign buyers are on the rise after the pandemic, but have recorded a slight drop in the last two years.
Regional differences are very pronounced:
- in coastal counties, the share of purchases without loans is much higher
- while in Zagreb and continental counties, purchases are more often made with loans
The lowest share of credit financing is recorded in Istria (14.8%), Šibenik-Knin (16.8%) and Zadar (18.4%) counties, which confirms that cash purchases are more common in coastal areas, often for tourism and rental purposes. On the other hand, in Međimurje, Zagreb, and Zagreb County, the share of credit purchases exceeds 38%.
Houses Are More Often Bought with Cash, Apartments More Often with Loans
The analysis shows that apartments are slightly more often bought with loans (33.6%) than houses (26.3%). Apartments purchased with a loan are on average larger (64 m²) than those purchased with cash (59 m²). The situation is reversed with houses. Namely, houses purchased with their own funds are larger on average than those purchased with a loan.
What Does This Mean for the Market?
This market structure has two sides. On the one hand, less dependence on loans also means less exposure of the banking sector to potential shocks in the real estate market. In other words, real estate prices and the economy are less dependent on interest rates and banking conditions.
On the other hand, the fact that most buyers have enough cash or access to capital creates pressure on prices, especially in attractive areas like Zagreb and the Adriatic coast. This makes it more difficult for young families and buyers who depend on loans to enter the market.
HNB data clearly show how the Croatian real estate market is specific in that it is dominated by cash. Seven out of ten purchases are made without loans, and loans are more significant only in Zagreb and the continental part of the country.
For banks, this means less risk, and for buyers, greater competition and a struggle with those who have cash. This structure is one of the key reasons why real estate prices in Croatia remain stably high, despite economic changes and rising interest rates.
